The economic and legal impact of the Supreme Court’s controversial decision last year in Kelo v. New London has been a common topic on this blog, so this Institute for Justice press release on a property dispute that arose from a developer manipulating a local government’s eminent domain power for his own benefit:

A federal court has now approved an extortion scheme using eminent domain under last yearís Kelo decision. Unless the U.S. Supreme Court overturns the rulings, developers may threaten property owners, ìYour money or your land.î
Think this is an overstatement?
Consider what is happening right now in Port Chester, N.Y., to entrepreneur Bart Didden and his business partner, whose case will be considered for review by the U.S. Supreme Court on January 5, 2007.
With the blessing of officials from the Village of Port Chester, the Villageís chosen developer approached Didden and his partner with an offer they couldnít refuse. Because Didden planned to build a CVS on his propertyóland the developer coveted for a Walgreensóthe developer demanded $800,000 from Didden to make him ìgo awayî or ordered Didden to give him an unearned 50 percent stake in the CVS development. If Didden refused, the developer would have the Village of Port Chester condemn the land for his private use. Didden rejected the bold-faced extortion. The very next day the Village of Port Chester condemned Diddenís property through eminent domain so it could hand it over to the developer who made the threat.
The 2nd U.S. Circuit Court of Appeals upheld this extortion under last yearís Kelo eminent domain decision. The court ruled that because this is taking place in a ìredevelopment zoneî they couldnít stop what the Village is doing.

Read the entire piece. Is it any surprise that most property owners over on Richmond Avenue in Houston want no part of the new proposed Metro light rail line? Bad law makes for perverse incentives, particularly when the incentivized party can use the 800 pound gorilla of the state for private purposes.